Return the Surplus
"Tax reform means, 'Don't tax you, don't tax me. Tax that fellow behind the tree.'" - Russell Long.
IF YOU THOUGHT that budget deficits cause rancor in the competition for meager resources, the arguments about what to do with expected federal government surpluses might be worse. President Clinton wants to bury us under an avalanche of small "feel good" programs with major chunks of the anticipated surpluses devoted to "saving social security," coupled with "targeted tax cuts." Without increasing social security taxes or reducing benefits "saving social security" effectively means reducing the federal debt. Targeted taxes cuts are merely an euphemism for scattering minor tax reductions as a payoff to political constituencies. Democrats in Congress seem content to do nothing in the hope the can silently tiptoe unnoticed into a Congressional majority in 2000.
Republicans, by contrast, have yet to gain secure footing after the enervating drama of the impeachment trial. Since the Reagan years, Republicans have been the party of tax cuts. General prosperity has made the pain of taxes less acute and, therefore, less compelling as a campaign issue. Republicans have little hope of riding a wave of tax slashing into the White House or to larger Congressional majorities. Moreover, low income and middle income constituents pay so small a fraction of the income tax that any significant reduction will have disproportionately larger effects on higher income groups. This makes it possible for Democrats to do what they do best, play the "class warfare" card at every opportunity.
On one hand Conservatives ought to be pleased. The two main policy alternatives on how to deal with the surpluses are to either reduce the federal debt or decrease taxes. The former should satisfy the "green eye shade" Republications, populating the moderate wing of the party. The latter choice is the favorite of Conservatives weaned on Reagan's tax cuts. The problem with just reducing the federal debt is that uncommitted dollars in Washington are an alluring temptation. It is easy to envision surplus funds frittered way in "emergency" allocations. In Washington, emergencies are defined as actions immediately necessary to win the next election.
Recently, Congressional Republicans have proposed more dramatic tax cuts under the assumption if you are going to be criticized for reducing taxes, you might as well make it a large tax cut. However, there is a third way; a way to reduce taxes and circumvent carping and caviling criticism that the tax cuts would reduce overall system progressivity.
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